Our daily roundup of retirement news your clients may be thinking about.
Is retirement 'crisis' overblown
The U.S. is on the brink of a retirement crisis, according to some industry experts, as people are expected to end up with savings that will not be enough to cover their needs in their golden years, writes Forbes contributor Andrew Biggs. However, the retirement savings benchmark that many of these experts use may be unnecessarily high for most people, writes Biggs. He cites a study by Fidelity, which recommended that an average household have a higher income in retirement than it had during its working years, as one example of too-high expectations. That sort of conclusion, he says, is "over the top and threatens to scare people unnecessarily." --Forbes
Yes, clients should ignore that 'sell everything' call
Some experts call on investors to sell all their investments except high-quality bonds as a way to recoup capital amid the Fed's decision to increase interest rates, according to MarketWatch. However, investors are advised to ignore this call, since it would be more risky to take too much action than doing too little. Investors pay investment-manager fees when selling, losing money that could have grown because of compounding, and history shows that making emotional decisions in investing often results in a less favorable outcome. --MarketWatch
Is your client's 401(k) safe in a rollercoaster market?
Clients who want to protect their portfolio from market volatility are advised to have an investment mix that is based on their retirement goals, according to CNBC. They need to account for the length of their retirement and risk tolerance when creating a retirement plan and determine their investing strategy with their age in mind. For example, young investors can adopt a more aggressive strategy, investing 85% in stocks and 15% in bonds, while the older ones will need to be less aggressive and start shifting to bonds as they age. --CNBC
Protection for fixed annuities
Annuity buyers need not worry if their insurer becomes insolvent or experiences financial woes, according to Kiplinger. While very few annuity carriers face insolvency, all insurers are members of their state's guaranty association, which provides protection to annuity holders. If an annuity insurer is experiencing financial troubles, the association will look for another carrier to assume the business or cover the annuity policy if it can't find an insurer to take over. --Kiplinger
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